If you are a Canadian Working Abroad, whether permanently or temporarily there are many tax implications you must be aware of.

Canadians working overseas permanently

A Canadian working permanently abroad must determine their residency status. The Canadian Revenue Agency (CRA) looks at three primary factors when determining an individual’s Canadian residency status:

1. The permanent home location

2. Spouse and/or common law partner and children home

3. Where the individual lives

Other factors that the CRA consider when determining a Canadians residency status:

· Canadian Diver’s licence

· Brank account and credit cards

· Investments in Canada

· Health Cards

· Social ties

· Personal possessions

If you are considering leaving Canada or already have, you should assess whether it is appropriate to:

· File a Departure Return

· Submit Form NR73

· Stop receiving Tax Credits

· Disclose Canadian assets

· Pay Departure tax

Withholding tax for Canadians Living abroad

Once you leave Canada, you will be subject to withholding tax. Withholding tax is applied at a rate of 25% on the Canadian source income that you receive. These items include interest, dividends, CPP, old age security and pension, RSP income and rents from real estate property.

Canadians living temporarily abroad

As a Canadian briefly living abroad you are considered a factual resident of Canada because of your residential and personal ties with Canada. As Canadians working abroad, you could be a factual resident of Canada under the following circumstances:

1. You worked temporarily outside of Canada

2. You teach or attend a school outside of Canada

3. You commute daily or weekly outside of Canada

4. You regularly vacate outside of Canada

Canadians temporarily outside of Canada still have too:

1. File a regular personal tax return which is due April 30th

2. Pay tax on worldwide income

3. Claim deductions and tax credits

4. Pay both Federal and Provincial tax

Foreign Tax Credit for Canadians working abroad temporarily

Canadians temporarily working abroad can claim foreign tax credit in order to avoid double taxation.

Canadians travelling extensively, live or working abroad are often still obliged to pay Canadian and provincial or territorial income tax. Whether you are a citizen of Canada who is considering making the move or if you have already have, it is important that you are aware of your residency status and the income tax rule that apply to you whilst you are outside of Canada.

As a citizen of Canada living in the UK your worldwide income is taxable under the Canadian tax system. It is essential that you are aware of your tax filing obligations as to avoid penalties and paying more tax than you should be.

Tax-Free Savings Accounts (TFSA) were introduced to Canada in 2009. This is a way for people who are age 18 and above to set money aside tax-free throughout their lifetime. Contributions to a TFSA are not deductible for income tax purposed. Any amount contributed as well as income earned in the account is generally tax-free, even when it is withdrawn. Administrative or other fees in relation to TFSA and any interest or money borrowed to contribute to a TFSA are not deductible.

British Columbians were the first Canadians that have to pay provincial income tax. Canadian personal income tax has since grown into a complex, ever changing set of rules that leaves many confused and with penalties.